You can begin to reduce your existing debt with the following steps:
Pay off high-rate debt first
The higher your interest rate, the more you wind up paying. Begin with your highest-rate credit cards and eliminate the balance as aggressively as possible. For example, assume you have two separate $2,000 balances, one charging 20% interest, the other 8%, on which you can pay a total of 6% per month. If you were to pay 4% per month on the higher-rate card and 2% on the lower-rate card (which is typically the minimum monthly payment), you would save $961 in interest and 18 months of payments over allocating 3% to each balance. continue reading…